Bona fide dispute over liability defeats winding-up relief where the alleged debt is not undisputed.

A winding-up petition founded on an alleged debt will not lie where the respondent raises a bona fide dispute on liability. The HC noted that objections concerning price variation, colour mismatch and quality defects were supported by correspondence predating the demand notice, showing the debt was not an undisputed liability. On that basis, the company court remedy under the Companies Act, 1956 was unavailable and the petition was rejected.

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Issues: Whether a winding-up petition based on an alleged debt was maintainable when the respondent raised a bona fide dispute regarding liability.

Analysis: The petition was founded on section 433(e) of the Companies Act, 1956, read with section 434(1)(a) of the Act. The respondent raised specific objections as to price variation, colour mismatch, and quality defects, supported by correspondence predating the demand notice. In such circumstances, the defence could not be treated as lacking bona fides, and the alleged debt was not shown to be an undisputed liability warranting winding-up relief.

Conclusion: The petition was not maintainable and was rejected.

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